Samsung raises spending to 60% after AI chips sell out

Samsung's decision to increase capital expenditure by over 60 percent, targeting US$63.1 billion, reflects efforts to expand market share and catch up in high-bandwidth memory (HBM) production. HBM is a specialized memory crucial for AI accelerators, like those from Nvidia Corp. The company views next-generation HBM for Nvidia’s Vera Rubin platform as a significant opportunity to compete with SK Hynix Inc., particularly as it aims to secure lucrative long-term contracts.

Despite a substantial 15-fold increase in semiconductor profits, Samsung's stock declined. This market reaction appears driven by investor expectations, particularly after rival SK Hynix announced significant new payouts and reportedly beat earnings estimates. Samsung's chip-division operating income fell slightly short of estimates, and its choice to delay outlining future shareholder payout plans until January created uncertainty for investors.

A key distinction in the high-demand HBM market also emerged: while SK Hynix stated its HBM was sold out through 2029, Samsung reported its HBM was sold out only through next year. This could signal investor concern regarding Samsung's perceived long-term competitive position in securing advanced memory contracts. The company aims to demonstrate progress with HBM4, having tripled sales in the third quarter, and plans for mass production of HBM4e in the first half of 2027.